The unemployment rate plummeted to its lowest level in more than two years in November, according to a new government report that shows both promise and hazards for President Obama in the election year ahead.

The jobless rate fell to 8.6 percent last month from 9 percent in October, the lowest level since the economic free fall in March 2009. Job creation was steady, with employers reporting that they added 120,000 people to their payrolls.

But while the new jobs numbers are among several recent indicators pointing to the recovery becoming more solid, the economic landscape less than a year before the presidential election still holds peril for the administration.

If current trends hold up into next year, Obama will be able to point to signs of economic progress. But he will still face an electorate groaning under the weight of three years of stagnant wages. And a major reason the unemployment rate fell in November was that people gave up looking for jobs and dropped out of the workforce.

Even the recent signs of economic progress may prove short-lived. In the spring of both 2010 and 2011, there was promising improvement in jobs numbers and other indicators, but that growth soon dissipated in the face of a deepening of Europe’s financial crisis, a moribund U.S. housing market and other factors.

That helps explain the subdued tone Obama took Friday in speaking about the steep drop in November joblessness. Even as he pointed proudly to 21 straight months of private-sector job creation, he used the occasion to urge Congress to extend unemployment insurance benefits and a cut to the payroll tax, both scheduled to expire in December.

“Failure to take either of these steps would be a significant blow to our economy,” Obama said, appearing with former president Bill Clinton at an event in Washington focused on making buildings more energy efficient.

A senior White House aide argued that those steps are important, specifically to serve as protection against future economic shocks.

“Congress enacted the payroll tax cut last year and extended unemployment benefits, and those two measures provided an important buffer against the rise in gasoline prices last year,” said Alan Krueger, chairman of the White House Council of Economic Advisers. “I think we continue to need support for aggregate demand in the economy, especially with head winds coming from Europe and elsewhere.”

House Republican leaders said the hiring uptick was “welcome news” but argued that Obama needs to spend more time focused on righting the economy and less time on the campaign trail.

“This morning’s unemployment rate underscores the need for the president to put a priority on addressing the country’s sustained high unemployment instead of his reelection campaign,” said House Majority Whip Kevin McCarthy (R-Calif.). “By the close of business today, the House will have sent more than 20 bipartisan jobs bills to the Senate that [Majority Leader Harry] Reid continues to block. It’s time for Senate Democrats to take these bills up so we can get the 14 million Americans that are unemployed back to work.”

House Speaker John A. Boehner (R-Ohio) said in a statement that “today marks the 34th consecutive month of unemployment above eight percent. As you may remember, the Obama administration promised unemployment would stay below eight percent if its ‘stimulus’ was enacted. That promise has gone unfulfilled.”

The new jobs report was not as good as it might appear from the decline in the unemployment rate. About half the drop came about for a good reason — more people describing themselves as employed — and half for a bad reason — people dropping out of the labor force, perhaps out of frustration. Average hourly earnings rose only 0.1 percent, or 2 cents, to $23.18. The 120,000 net new jobs employers reported is only about the rate of job creation needed to keep pace with a rising population.

But in a more positive sign, the Labor Department said that job creation was stronger in September and October than originally estimated, by a combined 72,000 jobs. And the survey of U.S. households, on which the unemployment rate is based, has now shown strong job growth for four straight months — 321,000 jobs a month, on average, since August. That hints that there may be some momentum in the economy that is not being captured by surveys of employers, perhaps as a result of rising self-employment or company start-ups.

The components of the jobs gain show the mixed picture. The biggest gainer was retail; the nation’s stores added 50,000 jobs in November — and the data are adjusted to filter out the usual seasonal variations, meaning that they added that many people over and above their usual holiday hiring. That suggests optimism about the holiday sales season.

Temporary employment services added 22,000 jobs. That bodes well; that category often presages overall job creation in the future, with employers adding temps before bringing on people full time.

“Overall this is a decent report in the context of an economy growing modestly, but there are clear signs in the household employment and temp numbers to suggest better times ahead,” said Ian Shepherdson, with High Frequency Economics.

The big jobs loser was government, as it has been for most of the past year. Public employment in November fell by 20,000 jobs, of which 5,000 were cuts by the U.S. Postal Service.